04-10-2019 Council Packet - Laserfiche WebLink

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STAFF REPORT TO:Mayor Keis and Members of the City Council FROM:Heidi Heller, City Clerk DATE:April 10, 2019 RE:Canabury Square HIA Deferred Assessment Interest Reduction Discussion BACKGROUND: The Canabury Square Condo Association (CSCA), consisting of 236 individual units, requested and received funding for major improvements to the building which was assessed to each unit’s property taxes through a Housing Improvement Assessment (HIA). The project was approved in 2009 and the HIA assessment was adopted in 2010. At that time, 97 property owners paid the assessment in full so it was not certified to their taxes and 97 owners had the assessment certified to their taxes payable for 15 years (2010-2024). An additional 42 property owners qualified to have the assessment deferred. According to the agreement, the HIA assessments that were not deferred could not be paid off early since the City had a debt obligation and needed the principal and interest payments in order to make our debt service payments on the bond. If any units were sold, the buyers were required to assume the assessment payments. In 2016, the City Council amended the disclosure statement to allow the HIA assessment to be paid off at any time. At this time, the property owners were required to pay all of the interest that would be accrued from 2016-2024. A total of eleven assessments were paid off in 2016-2017 when the all interest from 2016-2024 was required. Canabury Square property owners with deferred HIA assessments have had a unique advantage over the other Canabury Square property owners since they have always been able to pay off their assessment at any time without paying additional interest through 2024. This was possible because the City utilized an inter-fund loan to pay the $856,646 in assessments that were deferred. The 26 property owners who have paid off their deferred HIA assessment, only paid interest through the year of payoff, not through 2024 like the rest of the CSCA owners had to until 2018. If the Council were to opt to allow the 16 outstanding deferred HIA assessments to only pay interest for the months they have the assessments, staff estimates the financial impact to the City could be up to $9,000. If the Council opted to be fair to all 42 of the owners who had or currently have a deferred HIA assessment, the financial impact could be up to $25,000. The HIA assessments have been treated the same as any other assessment that the City certifies to a property. Interest on all assessments (both payable and deferred) is accrued annually and added to the principal balance in one lump amount. If an assessment is not paid by November 15